IMF Executive Board Concludes 2024 Article IV Consultation with Angola
IMF News, February 24, 2025
Source details
- Canonical URL
- IMF Executive Board Concludes 2024 Article IV Consultation with Angola
Other formats
Bibliographic details
- Published: February 24, 2025
Executive summary
- The Executive Board concluded the Article IV consultation with Angola.
- Angola’s economy recovered in 2024 as the oil sector rebounded; GDP growth is estimated at 3.8 percent in 2024, surpassing earlier projections.
- Public debt‑to‑GDP ratio declined in 2024, helped by higher nominal GDP growth and sustained primary surpluses, but fiscal consolidation efforts waned and fiscal slippages eroded buffers built during the 2018–21 EFF‑supported program.
- Inflation remained elevated driven by exchange rate pressures and higher food prices; the central bank raised the monetary policy rate by 150 bps in 2024.
- The currency depreciated by over 10 percent against the U.S. dollar in 2024.
- Recovery expected to continue with growth at 3 percent in 2025 and inflation projected to ease as cost‑push factors fade, but risks remain high including high external debt service, oil dependence, liquidity risks, and political cycle risks ahead of 2027 presidential elections.
Economic performance and policy actions in 2024
- Growth and sectoral performance:
- Real gross domestic product: 3.8 percent (2024).
- Oil sector: 3.2 percent (2024).
- Non‑oil sector: 3.9 percent (2024).
- Prices and monetary policy:
- Consumer prices (annual average): 21.0 (2024).
- Consumer prices (end of period): 27.5 (2024).
- Central bank raised monetary policy rate by 150 bps in 2024 and streamlined liquidity management, improving alignment of the interbank rate with the policy rate.
- Exchange rate and external position:
- Currency depreciated by over 10 percent against the U.S. dollar in 2024.
- Adverse market expectations and high external debt service weigh on the exchange rate.
- Government active cash and debt management helped mitigate liquidity pressures.
- Fiscal developments:
- Public debt‑to‑GDP ratio declined in 2024.
- Fiscal slippages from higher capital expenditures and a slower fuel subsidy reform eroded buffers from the prior EFF‑supported program.
Outlook and risks
- Growth and inflation projections:
- Growth expected to remain at 3 percent in 2025.
- Inflation projected to ease with the fading of cost‑push factors.
- Drivers and constraints:
- Resolution of maintenance bottlenecks and government incentives should help sustain oil production.
- High external debt service constrains development spending; oil dependence hampers sustainable growth.
- Liquidity risk could intensify if financing conditions deteriorate, potentially crowding out social spending and pressuring the exchange rate.
- Political cycle: early start of the 2027 presidential election cycle could slow reform implementation.
- Upside factors:
- Higher oil prices, further global monetary policy easing, and stronger non‑oil FDIs, including through the Lobito Corridor development, could improve the medium‑term outlook.
Executive Board assessment and policy recommendations
- Overall guidance:
- Directors agreed with the thrust of the staff appraisal, welcomed the recovery, and highlighted risks from oil price volatility and debt vulnerabilities.
- Urgency emphasized for accelerating structural reforms to strengthen macroeconomic and financial stability and foster diversified and inclusive growth.
- Fiscal policy:
- Returning to a fiscal consolidation path is critical to strengthen buffers and create space for development needs.
- Fully implement fuel subsidy reforms with mitigating measures to protect the most vulnerable.
- Intensify non‑oil revenue mobilization efforts.
- Rationalize public investment and improve spending efficiency per the 2019 PIMA recommendations.
- Strengthen public financial management, including the procurement framework and SOE reforms.
- Improve cash and debt management to mitigate liquidity risks and support a timely return to markets.
- Monetary and exchange rate policy:
- Maintain a tightening bias in monetary policy to ensure durable disinflation.
- Strictly adhere to the ceiling on government loans to safeguard international reserves and contain inflationary pressures.
- Continue streamlining liquidity management to enhance monetary policy transmission.
- Improve foreign exchange market functioning and exchange rate flexibility as part of the transition toward an inflation‑targeting framework.
- Financial sector and governance:
- Continue addressing financial sector vulnerabilities and AML/CFT weaknesses to achieve swift removal from the FATF grey list.
- Implement new supervisory regulations and develop a robust financial stability framework, including strengthened safety nets.
- Address vulnerabilities from the sovereign‑bank nexus, high NPLs, and problem banks; prepare for the upcoming FSAP assessment.
- Support the authorities’ National Development Plan with market‑friendly policies to streamline business regulations, enhance governance, fight corruption, develop human capital, and deepen financial inclusion.
- Strengthen statistical capacity to support sound policymaking.
Key economic indicators (2023–25)
- Real economy (percent change):
- Real gross domestic product: 1.0 (2023 Prel.), 3.8 (2024), 3.0 (2025 Proj.).
- Oil sector: -2.4 (2023), 3.2 (2024), 0.3 (2025).
- Non‑oil sector: 2.2 (2023), 3.9 (2024), 3.4 (2025).
- Nominal gross domestic product (GDP):
- 14.6 (2023), 33.3 (2024), 24.3 (2025).
- 9.5 (2023), 33.7 (2024), 17.4 (2025).
- 15.5 (2023), 33.2 (2024), 25.6 (2025).
- GDP deflator:
- 13.4 (2023), 28.5 (2024), 20.8 (2025).
- Non-oil GDP deflator:
- 14.4 (2023), 28.2 (2024), 21.3 (2025).
- Consumer prices (annual average):
- 13.6 (2023), 21.0 (2024).
- Consumer prices (end of period):
- 20.0 (2023), 27.5 (2024), 18.9 (2025).
- Central government (percent of GDP):
- Total revenue: 16.6 (2023), 16.0 (2024), 15.5 (2025).
- Of which: Oil-related: 10.3 (2023), 10.0 (2024), 9.7 (2025).
- Of which: Non-oil tax: 6.1 (2023), 5.6 (2024), 5.0 (2025).
- Total expenditure: 19.2 (2023), 17.6 (2024), 17.3 (2025).
- Current expenditure: 15.2 (2023), 14.1 (2024), 12.4 (2025).
- Capital spending: 4.1 (2023), 3.6 (2024), 4.9 (2025).
- Overall fiscal balance: -1.9 (2023), -1.0 (2024), -1.3 (2025).
- Non‑oil primary fiscal balance: -6.4 (2023), -5.7 (2024), -7.2 (2025).
- Money and credit (end of period, percent change):
- Broad money (M2): 37.8 (2023), 30.6 (2024), 38.5 (2025).
- Percent of GDP: 20.4 (2023), 22.7 (2024).
- Credit to the private sector (annual percent change): 28.8 (2023), 28.1 (2024), 27.0 (2025).
- Balance of payments:
- Trade balance (percent of GDP): 19.9 (2023), 19.7 (2024), 17.0 (2025).
- Exports of goods, f.o.b. (percent of GDP): 33.6 (2023), 33.1 (2024), 31.5 (2025).
- Of which: Oil and gas exports (percent of GDP): 31.6 (2023), 30.9 (2024), 28.6 (2025).
- Imports of goods, f.o.b. (percent of GDP): 13.8 (2023), 14.5 (2024).
- Terms of trade (percent change): -19.3 (2023), -4.0 (2024), -10.4 (2025).
- Current account balance (percent of GDP): 2.4 (2023).
- Gross international reserves (end of period, millions of U.S. dollars):
- 14,727 (2023), 15,227 (2024), 15,277 (2025).
- Gross international reserves (months of next year's imports): 7.3 (2023).
- Exchange rate:
- Official exchange rate (average, kwanzas per U.S. dollar): 685 (2023), 876 (2024).
- Official exchange rate (end of period, kwanzas per U.S. dollar): 829 (2023), 924 (2024).
- Public debt (percent of GDP):
- Public sector debt (gross)1: 71.4 (2023), 62.4 (2024), 63.3 (2025).
- Of which: Central Government debt: 67.9 (2023), 60.4 (2024), 61.9 (2025).
- Oil:
- Oil and gas production (millions of barrels per day): 1.205 (2023), 1.262 (2024), 1.266 (2025).
- Oil and gas exports (billions of U.S. dollars): 34.7 (2023), 35.4 (2024).
- Angola oil price (average, U.S. dollars per barrel): 80.6 (2023), 78.5 (2024), 70.3 (2025).
- Brent oil price (average, U.S. dollars per barrel): 82.3 (2023), 80.0 (2024).
Press Release No. 25/41, IMF Communications Department, February 24, 2025.